HUNTINGTON BANCSHARES INC/MD.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY PERIOD ENDED September 30, 2007

Commission File Number 0-2525

Huntington Bancshares Incorporated


Maryland		31-0724920
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

41 South High Street, Columbus, Ohio 43287

Registrant’s telephone number (614) 480-8300

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. [x] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer [x]		Accelerated filer [ ]		Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [x] No

There were 365,898,439 shares of Registrant’s common stock ($0.01 par value) outstanding on September 30, 2007.

Part 1. Financial Information

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

INTRODUCTION

Huntington Bancshares Incorporated (we or our) is a multi-state diversified financial holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through our subsidiaries, including our bank subsidiary, The Huntington National Bank (the Bank), organized in 1866, we provide full-service commercial and consumer banking services, mortgage banking services, automobile financing, equipment leasing, investment management, trust services, brokerage services, reinsurance of private mortgage insurance, reinsurance of credit life and disability insurance, and other insurance and financial products and services. Our banking offices are located in Ohio, Michigan, Indiana, Pennsylvania, West Virginia, and Kentucky. Selected financial service activities are also conducted in other states including: Dealer Sales offices in Arizona, Florida, Georgia, Nevada, New Jersey, New York, North Carolina, South Carolina, and Tennessee; Private Financial and Capital Markets Group offices in Florida; and Mortgage Banking offices in Maryland and New Jersey. Sky Insurance offers retail and commercial insurance agency services, through offices in Ohio, Pennsylvania, and Indiana. International banking services are available through the headquarters office in Columbus and a limited purpose office located in both the Cayman Islands and Hong Kong.

The following discussion and analysis provides you with information we believe necessary for understanding our financial condition, changes in financial condition, results of operations, and cash flows and should be read in conjunction with the financial statements, notes, and other information contained in this report. The Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) appearing in our 2006 Annual Report on Form 10-K (2006 Form 10-K), as updated by the information contained in this report, should be read in conjunction with this discussion and analysis.

Our discussion is divided into key segments:

	•		Introduction - Provides overview comments on important matters including risk factors, acquisitions, and other items. These are essential for understanding our performance and prospects.

	•		Discussion of Results of Operations - Reviews financial performance from a consolidated company perspective. It also includes a Significant Items Influencing Financial Performance Comparisons section that summarizes key issues helpful for understanding performance trends. Key consolidated balance sheet and income statement trends are also discussed in this section.

	•		Risk Management and Capital - Discusses credit, market, liquidity, and operational risks, including how these are managed, as well as performance trends. It also includes a discussion of liquidity policies, how we fund ourselves, and related performance. In addition, there is a discussion of guarantees and/or commitments made for items such as standby letters of credit and commitments to sell loans, and a discussion that reviews the adequacy of capital, including regulatory capital requirements.

	•		Lines of Business Discussion - Provides an overview of financial performance for each of our major lines of business and provides additional discussion of trends underlying consolidated financial performance.

Forward-Looking Statements

This report, including MD&A, contains certain forward-looking statements, including certain plans, expectations, goals, and projections, and including statements about the benefits of the merger between Huntington and Sky Financial, which are subject to numerous assumptions, risks, and uncertainties.

Actual results could differ materially from those contained or implied by such statements for a variety of factors including: the expected merger efficiencies and any revenue synergies from the merger may not be fully realized within the expected timeframes; disruption from the merger may make it more difficult to maintain relationships with clients, associates, or suppliers; changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of other business strategies; the nature, extent, and timing of governmental actions and reforms; and extended disruption of vital infrastructure. Additional factors that could cause results to differ materially

from those described above can be found in our 2006 Annual Report on Form 10-K, and documents subsequently filed with the Securities and Exchange Commission (SEC).

All forward-looking statements speak only as of the date they are made. We assume no obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws.

Risk Factors

We, like other financial companies, are subject to a number of risks, many of which are outside of our direct control, though efforts are made to manage those risks while optimizing returns. Among the risks assumed are: (1) credit risk , which is the risk that loan and lease customers or other counter parties will be unable to perform their contractual obligations, (2) market risk , which is the risk that changes in market rates and prices will adversely affect our financial condition or results of operation, (3) liquidity risk , which is the risk that we, or the Bank, will have insufficient cash or access to cash to meet operating needs, and (4) operational risk , which is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events . Refer to the ‘Risk Management and Capital’ section for additional information regarding risk factors. Additionally, more information on risk is set forth under the heading “Risk Factors” included in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2006, and subsequent filings with the SEC.

Critical Accounting Policies and Use of Significant Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of financial statements in conformity with GAAP requires us to establish critical accounting policies and make accounting estimates, assumptions, and judgments that affect amounts recorded and reported in our financial statements. Note 1 of the Notes to Consolidated Financial Statements included in our 2006 Form 10-K as supplemented by this report lists significant accounting policies we use in the development and presentation of our financial statements. This discussion and analysis, the significant accounting policies, and other financial statement disclosures identify and address key variables and other qualitative and quantitative factors necessary for an understanding and evaluation of our company, financial position, results of operations, and cash flows.

An accounting estimate requires assumptions about uncertain matters that could have a material effect on the financial statements if a different amount within a range of estimates were used or if estimates changed from period to period. Readers of this report should understand that estimates are made under facts and circumstances at a point in time, and changes in those facts and circumstances could produce actual results that differ from when those estimates were made.

Acquisition of Sky Financial

The merger with Sky Financial Group Inc. (Sky Financial) was completed on July 1, 2007. At the time of acquisition, Sky Financial had assets of $16.8 billion, including $13.3 billion of loans, and total deposits of $12.9 billion. Sky Financial results were fully included in our consolidated results for the full 2007 third quarter, and will impact all quarters thereafter. Additionally, during the 2007 third quarter, Sky Bank and Sky Trust, National Association (“Sky Trust”), merged into the Bank and systems integration was completed. As a result, performance comparisons of 2007 third quarter and 2007 nine-month performance to prior periods are affected as Sky Financial results were not included in the prior periods. Comparisons of the 2007 third quarter and 2007 nine-month performance compared with prior periods are impacted as follows:

	•		Increased the absolute level of reported average balance sheet, revenue, expense, and the absolute level of certain credit quality results (e.g., amount of net charge-offs).

	•		Increased the absolute level of reported non-interest expense items because of costs incurred as part of merger integration activities, most notably employee retention bonuses, outside programming services related to systems conversions, occupancy expenses, and marketing expenses related to customer retention initiatives. These net merger costs were $32.3 million in the 2007 third quarter.

Given the significant impact of the merger on reported 2007 results, we believe that an understanding of the impacts of the merger is necessary to understand better underlying performance trends. When comparing post-merger period results to premerger periods, we use the following terms when discussing financial performance:

•

“Merger related” refers to amounts and percentage changes representing the impact attributable to the merger.

	•		“Merger costs” represent non-interest expenses primarily associated with merger integration activities.

	•		“Non-merger related” refers to performance not attributable to the merger and include:

•

“Merger efficiencies”, which represent non-interest expense reductions realized as a result of the merger.

The following methodology has been implemented to estimate the approximate effect of the Sky Financial merger used to determine “merger-related” impacts.

Balance Sheet Items

For loans and leases, as well as total deposits, Sky Financial’s balances as of June 30, 2007, adjusted for purchase accounting adjustments, and transfers of loans to loans held-for-sale, are used in the comparison. To estimate the impact on 2007 third quarter average balances, it was assumed that the June 30, 2007 balances, as adjusted, remained constant throughout the 2007 third quarter and will remain constant in all subsequent periods.

Income Statement Items

For income statement line items, Sky Financial’s actual results for the first six months of 2007, adjusted for the impact of unusual items and purchase accounting adjustments, were determined. This six-month adjusted amount was divided by two to estimate a quarterly amount. This results in an approximate quarterly impact, as the methodology does not adjust for any unusual items, market related changes, or seasonal factors in Sky Financial’s 2007 six-month results. Nor does it consider any revenue or expense synergies realized since the merger date. This same estimated amount will also be used in all subsequent quarterly reporting periods. The one exception to this methodology of holding the estimated quarterly impact constant relates to the amortization of intangibles expense where the amount is known and is therefore used.

Certain tables contained within our discussion and analysis provide detail of changes to reported results to quantify the estimated impact of the Sky Financial merger using this methodology.

DISCUSSION OF RESULTS OF OPERATIONS

This section provides a review of financial performance from a consolidated perspective. It also includes a Significant Items Influencing Financial Performance Comparisons section that summarizes key issues important for a complete understanding of performance trends. Key consolidated balance sheet and income statement trends are discussed in this section. All earnings per share data are reported on a diluted basis. For additional insight on financial performance, please read this section in conjunction with the Lines of Business Discussion.

Summary

We reported 2007 third quarter net income of $138.2 million and earnings per common share of $0.38. These results compared favorably to net income of $80.5 million and earnings per common share of $0.34 in the 2007 second quarter, but declined from net income of $157.4 million and earnings per common share of $0.65 in the third quarter of 2006. Our year-to-date net income was $314.4 million, or $1.12 per common share, down from net income of $373.5 million, or $1.56 per common share, in the comparable year-ago period. Additionally, comparisons with the prior year are impacted by the benefits for income taxes and balance sheet restructuring charges in the comparable year-ago period. Period-to-period comparisons are significantly impacted by the Sky Financial acquisition, which closed on July 1, 2007. The acquisition solidified our position in Ohio, greatly expanded our presence in the Indianapolis market, and established western Pennsylvania as a new market. Customer reaction has been very positive, and we continue to work to ensure that all of the growth opportunities afforded by the acquisition are realized.

Expense control was a major highlight for the quarter. Although non-interest expense increased $140.9 million from the prior quarter, $161.3 million of the increase was merger related, either through merger related expenses or increased merger costs. Non-merger related expenses actually declined $20.4 million and represented most of the merger efficiencies that we targeted from the acquisition. We expect to achieve most of the remaining benefit next quarter. Our efficiency

ratio, which has been a key focal point for us, is approaching our targeted range, and we expect to be within, or very near, that range, once we achieve the remaining targeted merger efficiencies.

Fee income performance was mixed for the quarter. In addition to the increase in non-interest income that was merger related, non-merger related deposit service charges and other service charges showed very good growth, however, non-merger related trust services, mortgage banking, and brokerage and insurance income were down.

Net interest income for the third quarter of 2007 increased $156.2 million from the prior quarter. The current quarter included three months of net interest income attributable to the acquisition of Sky Financial, which added $12.8 billion of loans, net of transfers to loans held-for-sale and purchase accounting adjustment, and $12.9 billion of deposits at July 1, 2007. During the current quarter, we saw good growth in non-merger related commercial loans and certain consumer loans, however, average automobile leases continued to shrink, as expected, due to low consumer demand and competitive pricing. Additionally, the lack of growth in non-merger related average home equity loans and average residential real estate loans continued to reflect the softness in the real estate markets. Growth in non-merger related average total deposits was also good during the quarter, driven by strong growth in interest-bearing demand deposits and money market accounts. Our net interest margin was 3.52%, consistent with expectations and up from 3.26% in the second quarter, primarily merger related.

Consistent with expectations, overall credit quality was stable during the quarter. The allowance for loan and leases losses (ALLL) was 1.14% of total loans, down slightly from 1.15% at June 30, 2007. The ALLL coverage of nonperforming loans (NPLs) improved to 182% at September 30, 2007, from 145% at June 30, 2007, and declined from 189% at December 31, 2006. However, nonperforming assets (NPAs) increased $173.9 million from the prior quarter as we acquired $144.5 million of NPAs from Sky Financial. Additionally, we designated $16.3 million of impaired asset-backed securities as other NPAs. During the quarter, non-merger related NPLs and other-real-estate-owned (OREO) grew $13.0 million. Our outlook remains for NPLs to rise modestly in the 2007 fourth quarter, as there remains pressure on businesses and consumers in our markets.

Market conditions remain difficult and we do not expect that to change in the near future. We anticipate that the economic environment will continue to be negatively impacted by weakness in residential real estate markets and negative impacts from the on-going challenges in the automotive manufacturing and supplier sector. We expect our greatest impacts to be in our eastern Michigan and northern Ohio markets.

Significant Items

Certain components of the income statement are naturally subject to more volatility than others. As a result, readers of this report may view such items differently in their assessment of “underlying” or “core” earnings performance compared with their expectations and/or any implications resulting from them on their assessment of future performance trends.

Therefore, we believe the disclosure of certain “Significant Items” in current and prior period results aids readers of this report in better understanding corporate performance so that they can ascertain for themselves what, if any, items they may wish to include or exclude from their analysis of performance, within the context of determining how that performance differed from their expectations, as well as how, if at all, to adjust their estimates of future performance accordingly.

To this end, we have adopted a practice of listing as “Significant Items” in our external disclosure documents (including earnings press releases, investor presentations, Forms 10-Q and 10-K) individual and/or particularly volatile items that impact the current period results by $0.01 per share or more. Such “Significant Items” generally fall within one of two categories: timing differences and other items.

Timing Differences

Part of our regular business activities are by their nature volatile, including capital markets income and sales of loans. While such items may generally be expected to occur within a full year reporting period, they may vary significantly from period to period. Such items are also typically a component of an income statement line item and not, therefore, readily discernable. By specifically disclosing such items, analysts/investors can better assess how, if at all, to adjust their estimates of future performance.

Other Items

From time to time an event or transaction might significantly impact revenues, expenses, or taxes in a particular reporting period that are judged to be unusual, short-term in nature, and/or materially outside typically expected performance. Examples would be (1) merger costs, including restructuring charges and asset valuation adjustments, as they typically impact expenses for only a few quarters during the period of transition; (2) changes in an accounting principle; (3) unusual tax assessments or refunds; (4) a large gain/loss on the sale of an asset; (5) outsized commercial loan net charge-offs; and other items deemed significant. By disclosing such items, analysts/investors can better assess how, if at all, to adjust their estimates of future performance.

Provision for Credit Losses

While the provision for credit losses may vary significantly among periods, and often exceeds $0.01 per share, we typically exclude it from the list of significant items unless, in our view, there is a significant, specific credit (or multiple significant, specific credits) affecting comparability among periods. In determining whether any portion of the provision for credit losses should be included as a significant item, we consider, among other things, that the provision is a major income statement caption rather than a component of another caption and, therefore, the period-to-period variance can be readily determined.

Other Exclusions

“Significant Items” for any particular period are not intended to be a complete list of items that may significantly impact future periods. A number of factors, including those described in Huntington’s 2006 Annual Report on Form 10-K and other factors described from time to time in Huntington’s other filings with the SEC, could also significantly impact future periods.

Table 1 — Selected Quarterly Income Statement Data ^{(1), (7)}


	2007									2006
(in thousands, except per share amounts)	Third			Second			First			Fourth			Third

Interest income	$	851,155		$	542,461		$	534,949		$	544,841		$	538,988
Interest expense		441,522			289,070			279,394			286,852			283,675

Net interest income		409,633			253,391			255,555			257,989			255,313
Provision for credit losses		42,007			60,133			29,406			15,744			14,162

Net interest income after provision for credit losses		367,626			193,258			226,149			242,245			241,151

Service charges on deposit accounts		78,107			50,017			44,793			48,548			48,718
Trust services		33,562			26,764			25,894			23,511			22,490
Brokerage and insurance income		28,806			17,199			16,082			14,600			14,697
Other service charges and fees		21,045			14,923			13,208			13,784			12,989
Bank owned life insurance income		14,847			10,904			10,851			10,804			12,125
Mortgage banking income		9,629			7,122			9,351			6,169			8,512
Securities (losses) gains ⁽²⁾		(13,152	)		(5,139	)		104			(15,804	)		(57,332	)
Other income		31,830			34,403			24,894			38,994			35,711

Total non-interest income		204,674			156,193			145,177			140,606			97,910

Personnel costs		202,148			135,191			134,639			137,944			133,823
Outside data processing and other services		40,600			25,701			21,814			20,695			18,664
Net occupancy		33,334			19,417			19,908			17,279			18,109
Equipment		23,290			17,157			18,219			18,151			17,249
Marketing		13,186			8,986			7,696			6,207			7,846
Professional services		11,273			8,101			6,482			8,958			6,438
Telecommunications		7,286			4,577			4,126			4,619			4,818
Printing and supplies		4,743			3,672			3,242			3,610			3,416
Amortization of intangibles		19,949			2,519			2,520			2,993			2,902
Other expense		29,754			19,334			23,426			47,334			29,165

Total non-interest expense		385,563			244,655			242,072			267,790			242,430

Income before income taxes		186,737			104,796			129,254			115,061			96,631
Provision (benefit) for income taxes ⁽³⁾		48,535			24,275			33,528			27,346			(60,815	)

Net income	$	138,202		$	80,521		$	95,726		$	87,715		$	157,446

Average common shares — diluted		368,280			239,008			238,754			239,881			240,896

Per common share
Net income — diluted	$	0.38		$	0.34		$	0.40		$	0.37		$	0.65
Cash dividends declared		0.265			0.265			0.265			0.250			0.250

Return on average total assets		1.02	%		0.92	%		1.11	%		0.98	%		1.75	%
Return on average total shareholders’ equity		8.8			10.6			12.9			11.3			21.0
Return on average tangible shareholder’s equity ⁽⁴⁾		20.9			13.6			16.5			14.5			27.1
Net interest margin ⁽⁵⁾		3.52			3.26			3.36			3.28			3.22
Efficiency ratio ⁽⁶⁾		57.7			57.8			59.2			63.3			57.8
Effective tax rate ⁽³⁾		26.0			23.2			25.9			23.8			(62.9	)

Revenue — fully taxable equivalent (FTE)
Net interest income	$	409,633		$	253,391		$	255,555		$	257,989		$	255,313
FTE adjustment		5,712			4,127			4,047			4,115			4,090

Net interest income ⁽⁵⁾		415,345			257,518			259,602			262,104			259,403
Non-interest income		204,674			156,193			145,177			140,606			97,910

Total revenue ⁽⁵⁾	$	620,019		$	413,711		$	404,779		$	402,710		$	357,313


⁽¹⁾		Comparisons for presented periods are impacted by a number of factors. Refer to the ‘Significant Items Influencing Financial Performance Comparisons’ for additional discussion regarding these key factors.

⁽²⁾		Includes $57.5 million of securities impairment losses for the 2006 third quarter.

⁽³⁾		The third quarter of 2006 includes $84.5 million benefit reflecting the resolution of a federal income tax audit of tax years 2002 and 2003, as well as the recognition of federal tax loss carry backs.

⁽⁴⁾		Net income less expense of amortization of intangibles (net of tax) for the period divided by average tangible common shareholders’ equity. Average tangible common shareholders’ equity equals average total common shareholders’ equity less average intangible assets and goodwill.

⁽⁵⁾		On a fully taxable equivalent (FTE) basis assuming a 35% tax rate.

⁽⁶⁾		Non-interest expense less amortization of intangibles divided by the sum of FTE net interest income and non-interest income excluding securities gains (losses).

⁽⁷⁾		On July 1, 2007, Huntington acquired Sky Financial Group, Inc. Accordingly, the balances presented include the impact of the acquisition from that date.

Table 2 — Selected Year to Date Income Statement Data ^{(1), (7)}


	Nine Months Ended September 30,						Change
(in thousands, except per share amounts)	2007			2006			Amount			Percent

Interest income	$	1,928,565		$	1,525,678		$	402,887			26.4	%
Interest expense		1,009,986			764,490			245,496			32.1

Net interest income		918,579			761,188			157,391			20.7
Provision for credit losses		131,546			49,447			82,099			N.M.

Net interest income after provision for credit losses		787,033			711,741			75,292			10.6

Service charges on deposit accounts		172,917			137,165			35,752			26.1
Trust services		86,220			66,444			19,776			29.8
Brokerage and insurance income		62,087			44,235			17,852			40.4
Other service charges and fees		49,176			37,570			11,606			30.9
Bank owned life insurance income		36,602			32,971			3,631			11.0
Mortgage banking income		26,102			35,322			(9,220	)		(26.1	)
Securities losses ⁽²⁾		(18,187	)		(57,387	)		39,200			(68.3	)
Other income		91,127			124,143			(33,016	)		(26.6	)

Total non-interest income		506,044			420,463			85,581			20.4

Personnel costs		471,978			403,284			68,694			17.0
Outside data processing and other services		88,115			58,084			30,031			51.7
Net occupancy		72,659			54,002			18,657			34.5
Equipment		58,666			51,761			6,905			13.3
Marketing		29,868			25,521			4,347			17.0
Professional services		25,856			18,095			7,761			42.9
Telecommunications		15,989			14,633			1,356			9.3
Printing and supplies		11,657			10,254			1,403			13.7
Amortization of intangibles		24,988			6,969			18,019			N.M.
Other expense		72,514			90,601			(18,087	)		(20.0	)

Total non-interest expense		872,290			733,204			139,086			19.0

Income before income taxes		420,787			399,000			21,787			5.5
Provision for income taxes ⁽³⁾		106,338			25,494			80,844			N.M.

Net income	$	314,449		$	373,506		$	(59,057	)		(15.8)	%


Average common shares — diluted		282,014			239,933			42,081			17.5	%

Per common share
Net income per common share — diluted	$	1.12		$	1.56		$	(0.44	)		(28.2)	%
Cash dividends declared		0.795			0.750			0.045			6.0

Return on average total assets		1.02	%		1.43	%		(0.41	)		(28.7)	%
Return on average total shareholders’ equity		10.3			17.2			(6.9	)		(40.1	)
Return on average tangible shareholders’ equity ⁽⁴⁾		17.3			21.5			(4.2	)		(19.5	)
Net interest margin ⁽⁵⁾		3.40			3.29			0.11			3.3
Efficiency ratio ⁽⁶⁾		58.2			58.1			0.1			0.2
Effective tax rate ⁽³⁾		25.3			6.4			18.9			N.M.

Revenue — fully taxable equivalent (FTE)
Net interest income	$	918,578		$	761,188		$	157,390			20.7	%
FTE adjustment ⁽⁵⁾		13,886			11,910			1,976			16.6

Net interest income		932,464			773,098			159,366			20.6
Non-interest income		506,046			420,463			85,583			20.4

Total revenue	$	1,438,510		$	1,193,561		$	244,949			20.5	%


N.M., not a meaningful value.


⁽¹⁾		Comparisons for presented periods are impacted by a number of factors. Refer to the ‘Significant Items Influencing Financial Performance Comparisons’ for additional discussion regarding these key factors.

⁽²⁾		Includes $57.5 million of securities impairment losses for the 2006 third quarter.

⁽³⁾		The third quarter of 2006 includes $84.5 million benefit reflecting the resolution of a federal income tax audit of tax years 2002 and 2003, as well as the recognition of federal tax loss carry backs.

⁽⁴⁾		Net income less expense of amortization of intangibles (net of tax) for the period divided by average tangible common shareholders’ equity. Average tangible common shareholders’ equity equals average total common shareholders’ equity less average intangible assets and goodwill.

⁽⁵⁾		On a fully taxable equivalent (FTE) basis assuming a 35% tax rate.

⁽⁶⁾		Non-interest expense less amortization of intangibles divided by the sum of FTE net interest income and non-interest income excluding securities gains/(losses).

⁽⁷⁾		On July 1, 2007, Huntington acquired Sky Financial Group, Inc. Accordingly, the balances presented include the impact of the acquisition from that date.

Significant Items Influencing Financial Performance Comparisons

Earnings comparisons from the beginning of 2006 through the third quarter of 2007 were impacted by a number of significant items summarized below.

Sky Financial Acquisition. The merger with Sky Financial was completed on July 1, 2007. At the time of acquisition, Sky Financial had assets of $16.8 billion, including $13.3 billion of loans, and total deposits of $12.9 billion. Sky Financial results are reflected in our consolidated results beginning July 1, 2007. The impacts of the affected quarterly and year-to-date reported results compared with premerger reporting periods are as follows:

	•		Increased the absolute level of reported average balance sheet, revenue, expense, and credit quality results (for example, net charge-offs).

	•		Increased reported non-interest expense items as a result of costs incurred as part of merger integration activities, most notably employee retention bonuses, outside programming services related to systems conversions, and marketing expenses related to customer retention initiatives. These net merger costs were $0.8 million in the 2007 first quarter, $7.6 million in the 2007 second quarter, and $32.3 million in the 2007 third quarter.

Balance Sheet Restructuring . In third and fourth quarters of 2006, we utilized the excess capital resulting from the third quarter’s significant reduction to federal tax expense (see Item 6 below) to restructure certain under-performing components of our balance sheet. Total securities losses as a result of these actions totaled $73.3 million. The refinancing of Federal Home Loan Bank (FHLB) funding and the sale of mortgage loans resulted in total charges of $4.4 million, resulting in total balance sheet restructuring costs of $77.7 million ($0.21 per common share). Our actions impacted 2006 third and fourth quarter results as follows:

	•		$57.3 million pretax ($0.16 per common share) negative impact in the 2006 third quarter from securities impairment. Subsequent to the end of the quarter, we initiated a review of our investment securities portfolio. The objective of this review was to reposition the portfolio to optimize performance in light of changing economic conditions and other factors. A total of $2.1 billion of securities, primarily consisting of U.S. Treasury, agency securities, and mortgage-backed securities, as well as certain other asset-backed securities, were identified as other-than-temporarily impaired as a result of this review.

	•		$20.2 million pretax ($13.1 million after tax or $0.05 per common share) negative impact in the 2006 fourth quarter related to costs associated with the completion of the balance sheet restructuring. This consisted of $9.0 million pretax of investment securities losses as well as $6.8 million of additional impairment on certain asset-backed securities not included in the restructuring recognized in the third quarter, and $4.4 million pretax of other balance sheet restructuring expenses, most notably FHLB funding refinancing costs.

Mortgage servicing rights (MSRs) and related hedging. Included in net market related losses are net losses or gains from our mortgage servicing rights and the related hedging. MSR fair values are very sensitive to movements in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be greatly reduced by prepayments. Prepayments usually increase when mortgage interest rates decline and decrease when mortgage interest rates rise. A hedging strategy is used to minimize the impact from MSR fair value changes. However, volatile changes in interest rates can diminish the effectiveness of these hedges. We typically report MSR fair value adjustments net of hedge-related trading activity. Net income included the following net impact of MSR hedging activity (reference Table 11) :


(in thousands)
	Net			Non-									Per
	interest			interest			Pretax			Net			Common
Period	income			income			income			income			Share
1Q ‘07	$	—		$	(2,018	)	$	(2,018	)	$	(1,312	)	$	(0.01	)
2Q ‘07		248			(4,998	)		(4,750	)		(3,088	)		(0.01	)
3Q ‘07		2,357			(6,002	)		(3,645	)		(2,369	)		(0.01	)

9 mo. ‘07	$	2,605		$	(13,018	)	$	(10,413	)	$	(6,769	)	$	(0.02	)


1Q ‘06	$	—		$	4,575	(1)	$	4,575		$	2,974		$	0.01
2Q ‘06		—			1,542			1,542			1,002			—
3Q ‘06		38			(38	)		—			—			—

9 mo. ‘06		38			6,079			6,117			3,976			0.02

4Q ‘06		(2	)		(2,493	)		(2,495	)		(1,622	)		(0.01	)

12 mo. ‘06	$	36		$	3,586		$	3,622		$	2,354		$	0.01


(1)		Includes $5.1 million related to the positive impact of adopting SFAS No. 156

Beginning in the 2006 first quarter, we adopted Statement of Financial Accounting Standards (Statement) No. 156, Accounting for Servicing of Financial Assets (an amendment of FASB Statement No. 140), which allowed us to carry MSRs at fair value. This resulted in a $5.1 million pretax ($0.01 per common share) positive impact in the 2006 first quarter (this impact is reflected in the above table). Under the fair value approach, servicing assets and liabilities are recorded at fair value at each reporting date. Changes in fair value between reporting dates are recorded as an increase or decrease in mortgage banking income. MSR assets are included in other assets.

Other net market-related losses. Other net market-related losses include losses and gains related to the following market-driven activities: gains and losses from equity investing (included in other non-interest income), net securities gains and losses, and the impact from the extinguishment of debt (included as other non-interest expense). Total net market-related losses also include the net impact of MSRs and related hedging (see item 3 above). Net income included the following impact from other net market-related losses:


(in thousands)
	Securities						Debt									Per
	Gains/			Equity			Extinguish-			Pretax			Net			Common
Period	(Losses)			Investing			ment			income			income			Share
1Q ‘07	$	104		$	(8,530	)	$	—		$	(8,426	)	$	(5,477	)	$	(0.02	)
2Q ‘07		(5,139	)		2,301			4,090			1,252			814			—
3Q ‘07		(13,152	)		(4,387	)		3,220			(14,319	)		(9,307	)		(0.03	)

9 mo. ‘07	$	(18,187	)	$	(10,616	)	$	7,310		$	(21,493	)	$	(13,970	)	$	(0.05	)


1Q ‘06	$	(20	)	$	1,505		$	—		$	1,485		$	965		$	—
2Q ‘06		(35	)		2,322			—			2,287			1,487			0.01
3Q ‘06		(57,332	)		352			—			(56,980	)		(37,037	)		(0.15	)

9 mo. ‘06		(57,387	)		4,179			—			(53,208	)		(34,585	)		(0.14	)
4Q ‘06		(15,804	)		3,257			(4,389	)		(16,936	)		(11,008	)		(0.05	)

12 mo. ‘06	$	(73,191	)	$	7,436		$	(4,389	)	$	(70,144	)	$	(45,593	)	$	(0.19	)

5.		Significant commercial loan provision expense. Performance for the 2007 second quarter included $24.8 million ($16.1 million after tax, or $0.07 per common share) in provision for credit losses associated with three credit relationships: two in the eastern Michigan single-family home builder sector and one northern Ohio commercial credit to an auto industry-related manufacturing company. In the 2007 second quarter, charge-offs of $12.2 million were recorded against two of these credit relationships. In the 2007 third quarter, an additional $10.0 million of charge-offs were recorded, relating to all three of these credit relationships.

6.		Effective tax rate. The effective tax rate for the 2006 third quarter included an $84.5 million ($0.35 per common share) reduction of federal income tax expense from the release of tax reserves as a result of the resolution of the federal income tax audit for 2002 and 2003 and the recognition of federal tax loss carry backs.

7.		Other significant items influencing earnings performance comparisons. In addition to the items discussed separately in this section, a number of other items impacted financial results. These included:

		2007 - First Quarter

•

$1.9 million pretax ($1.2 million after tax or $0.01 per common share) negative impact due to litigation losses.

2006 - Fourth Quarter

	•		$10.0 million pretax ($6.5 million after tax or $0.03 per common share) contribution to the Huntington Foundation.

	•		$5.2 million pretax ($3.6 million after tax or $0.02 per common share) increase in automobile lease residual value losses. This increase reflected higher relative losses on vehicles sold at auction, most notably high-line imports and larger sport utility vehicles.

	•		$4.5 million pretax ($2.9 million after tax or $0.01 per common share) in severance and consolidation expenses. This reflected severance-related expenses associated with a reduction of 75 Regional Banking staff positions, as well as costs associated with the retirements of a vice chairman and an executive vice president.

	•		$2.6 million pretax ($1.7 million after tax or $0.01 per common share) gain related to the sale of MasterCard ^® stock.

Table 3 — Significant Items Influencing Earnings Performance Comparison ⁽¹⁾


	Three Months Ended
	September 30, 2007					June 30, 2007					September 30, 2006
(in millions)	After-tax		EPS			After-tax		EPS			After-tax		EPS

Net income — reported earnings	$	138.2				$	80.5				$	157.4
Earnings per share, after tax			$	0.38				$	0.34				$	0.65
Change from prior quarter — $				0.04					(0.06	)				0.19
Change from prior quarter — %				11.8	%				(15.0	)%				41.3	%

Change from a year-ago — $			$	(0.27	)			$	(0.12	)			$	0.18
Change from a year-ago — %				(41.5	)%				(26.1	)%				38.3	%


Significant items - favorable (unfavorable) impact:	Earnings ⁽²⁾			EPS			Earnings ⁽²⁾			EPS			Earnings ⁽²⁾			EPS

Merger costs	$	(32.3	)	$	(0.06	)	$	(7.6	)	$	(0.02	)	$	—		$	—
Net market-related losses		(18.0	)		(0.03	)		(3.5	)		(0.01	)		—			—
Significant commercial loan provision expense		—			—			(24.8	)		(0.07	)		—			—
Reduction to federal income tax expense ⁽³⁾		—			—			—			—			84.5			0.35
Balance sheet restructuring		—			—			—			—			(57.3	)		(0.16	)
Adjustment for equity method investments		—			—			—			—			(2.1	)		(0.01	)


	Nine Months Ended
	September 30, 2007					September 30, 2006
(in millions)	After-tax		EPS			After-tax		EPS

Net income — reported earnings	$	314.4				$	373.5
Earnings per share, after tax			$	1.12				$	1.56
Change from a year-ago — $				(0.44	)				0.22
Change from a year-ago — %				(28.2	)%				16.4	%


Significant items - favorable (unfavorable) impact:	Earnings ⁽²⁾			EPS			Earnings ⁽²⁾				EPS

Merger costs	$	(40.7	)	$	(0.09	)	$	(4.2	)	$	(0.01	)
Net market-related losses		(32.0	)		(0.07	)		5.1			0.01
Significant commercial loan provision expense		(24.8	)		(0.06	)		—			—
Reduction to federal income tax expense ⁽³⁾		—			—			84.5			0.35
MSR FAS 156 accounting change		—			—			5.1			0.01
Balance sheet restructuring		—			—			(57.3	)		(0.16	)
Adjustment for equity method investments		—			—			(3.2	)		(0.01	)
Adjustment to defer home equity annual fees		—			—			(2.3	)		(0.01	)


⁽¹⁾		Refer to the ‘Significant Items Influencing Financial Performance Comparisons’ for additional discussion regarding these items.

⁽²⁾		Pretax unless otherwise noted.

⁽³⁾		After tax

Net Interest Income
(This section should be read in conjunction with Significant Items 1, 2, 3, and 7.)

2007 Third Quarter versus 2006 Third Quarter

Fully taxable equivalent net interest income for the 2007 third quarter was $415.3 million. This represented an increase of $155.9 million, or 60%, from the year-ago quarter. This reflected the favorable impact of a $14.9 billion increase in average earning assets, of which $13.5 billion represented an increase in average loans and leases, as well as the benefit of an increase in the fully taxable equivalent net interest margin of 30 basis points to 3.52%. The 3.52% fully taxable equivalent net interest margin was consistent with our expectations for a relatively stable net interest margin compared with the pro forma 2007 second quarter level of 3.50%.

The following table details the estimated merger related impacts on our reported loans and deposits:

Table 4 — Average Loans/Leases and Deposits — Estimated Merger Related Impacts — 3Q’07 vs. 3Q’06


	Third Quarter				Change					Merger		Non-merger Related
(in millions)	2007		2006		Amount		%			Related		Amount			% ⁽¹⁾

Loans
Total commercial	$	22,016	$	12,039	$	9,977		82.9	%	$	8,746	$	1,231			5.9	%

Automobile loans and leases		4,354		4,055		299		7.4			432		(133	)		(3.0	)
Home equity		7,355		5,041		2,314		45.9			2,385		(71	)		(1.0	)
Residential mortgage		5,456		4,748		708		14.9			1,112		(404	)		(6.9	)
Other consumer		647		430		217		50.5			143		74			12.9

Total consumer		17,812		14,274		3,538		24.8			4,072		(534	)		(2.9	)

Total loans	$	39,828	$	26,313	$	13,515		51.4	%	$	12,818	$	697			1.8	%


Deposits
Demand deposits — non-interest bearing	$	5,384	$	3,509	$	1,875		53.4	%	$	1,829	$	46			0.9	%
Demand deposits — interest bearing		3,808		2,169		1,639		75.6			1,460		179			4.9
Money market deposits		6,869		5,689		1,180		20.7			996		184			2.8
Savings and other domestic deposits		5,043		2,923		2,120		72.5			2,594		(474	)		(8.6	)
Core certificates of deposit		10,425		5,334		5,091		95.4			4,630		461			4.6

Total core deposits		31,529		19,624		11,905		60.7			11,509		396			1.3
Other deposits		6,123		4,969		1,154		23.2			1,342		(188	)		(3.0	)

Total deposits	$	37,652	$	24,593	$	13,059		53.1	%	$	12,851	$	208			0.6	%


⁽¹⁾		Calculated as non-merger related / (prior period + merger-related)

The $0.7 billion, or 2%, non-merger related increase in total average loans primarily reflected:

•

$1.2 billion, or 6%, increase in average total commercial loans, reflecting continued strong growth in middle-market commercial and industrial (C&I) loans. The increase in commercial loans was spread across substantially all regions.

Partially offset by:

•

$0.5 billion, or 3%, decrease in average total consumer loans, reflecting continued declines in automobile leasing due to low consumer demand and competitive pricing, as well as the impact of mortgage loan sales over the last 12 months.

Also contributing to the growth in average earning assets was a $1.1 billion increase in average trading account securities. The increase in these assets reflected a change in our strategy to use trading account securities to hedge the change in fair value of our MSRs.

Concerning total average deposits, the $0.2 billion of non-merger related increase primarily reflected:

•

$0.4 billion, or 1%, increase in average total core deposits, reflecting strong growth in interest bearing demand deposits and money market accounts. While there was strong growth in core certificates of deposits, this was offset by a decline in savings and other domestic deposits, as customers transferred funds from lower rate to higher rate accounts.

Partially offset by:

•

$0.2 billion, or 3%, decline in other non-core deposits driven by a decline in brokered deposits and negotiable certificates of deposit.

2007 Third Quarter versus 2007 Second Quarter

Fully taxable equivalent net interest income for the 2007 third quarter was $415.3 million. This represented an increase of $157.8 million, or 61%, from the prior quarter. This reflected the favorable impact of a $15.2 billion increase in average earning assets, of which $13.4 billion represented an increase in average loans and leases, as well as the benefit of an increase in the fully taxable equivalent net interest margin of 26 basis points to 3.52%. These increases were primarily merger related.

The following table details the estimated merger related impacts on our reported loans and deposits:

Table 5 — Average Loans/Leases and Deposits — Estimated Merger Related Impacts — 3Q’07 vs. 2Q’07


	Third		Second
	Quarter		Quarter		Change					Merger		Non-merger Related
(in millions)	2007		2007		Amount		Percent			Related		Amount			% ⁽¹⁾

Loans
Total commercial	$	22,016	$	12,818	$	9,198		71.8	%	$	8,746	$	452			2.1	%

Automobile loans and leases		4,354		3,873		481		12.4			432		49			1.1
Home equity		7,355		4,973		2,382		47.9			2,385		(3	)		(0.0	)
Residential mortgage		5,456		4,351		1,105		25.4			1,112		(7	)		(0.1	)
Other consumer		647		424		223		52.6			143		80			14.1

Total consumer		17,812		13,621		4,191		30.8			4,072		119			0.7

Total loans	$	39,828	$	26,439	$	13,389		50.6	%	$	12,818	$	571			1.5	%


Deposits
Demand deposits — non-interest bearing	$	5,384	$	3,591	$	1,793		49.9	%	$	1,829	$	(36	)		(0.7	)%
Demand deposits — interest bearing		3,808		2,404		1,404		58.4			1,460		(56	)		(1.4	)
Money market deposits		6,869		5,466		1,403		25.7			996		407			6.3
Savings and other domestic deposits		5,043		2,863		2,180		76.1			2,594		(414	)		(7.6	)
Core certificates of deposit		10,425		5,591		4,834		86.5			4,630		204			2.0

Total core deposits		31,529		19,915		11,614		58.3			11,509		105			0.3
Other deposits		6,123		4,358		1,765		40.5			1,342		423			7.4

Total deposits	$	37,652	$	24,273	$	13,379		55.1	%	$	12,851	$	528			1.4	%


⁽¹⁾		Calculated as non-merger related / (prior period + merger-related)

The $0.6 billion, or 1%, non-merger related increase in average total loans and leases primarily reflected 2% growth in average total commercial loans due to continued strong growth across substantially all regions. Non-merger related average total consumer loans increased 1% with most categories essentially unchanged.

Also contributing to the growth in average earning assets were $0.9 billion increase in average trading account securities and $0.7 billion in average investment securities. These increases were primarily merger related. The increase in these assets reflected a change in our strategy to use trading account securities to hedge the change in fair value of our MSRs.

Table 6 — Consolidated Quarterly Average Balance Sheets


	Average Balances															Change
Fully taxable equivalent basis	2007									2006						3Q07 vs 3Q06
(in millions)	Third			Second			First			Fourth			Third			Amount			Percent

Assets
Interest bearing deposits in banks	$	292		$	259		$	93		$	77		$	75		$	217			N.M.	%
Trading account securities		1,149			230			48			116			96			1,053			N.M.
Federal funds sold and securities purchased under resale agreements		557			574			503			531			266			291			N.M.
Loans held for sale		419			291			242			265			275			144			52.4
Investment securities:
Taxable		3,951			3,253			3,595			3,792			4,364			(413	)		(9.5	)
Tax-exempt		675			629			591			594			581			94			16.2

Total investment securities		4,626			3,882			4,186			4,386			4,945			(319	)		(6.5	)
Loans and leases: ⁽¹⁾

Commercial:
Middle market commercial and industrial		10,301			6,209			6,070			5,882			5,651			4,650			82.3
Middle market commercial real estate:
Construction		1,782			1,245			1,151			1,170			1,129			653			57.8
Commercial		5,623			2,865			2,772			2,839			2,846			2,777			97.6

Middle market commercial real estate		7,405			4,110			3,923			4,009			3,975			3,430			86.3
Small business		4,310			2,499			2,466			2,421			2,413			1,897			78.6

Total commercial		22,016			12,818			12,459			12,312			12,039			9,977			82.9

Consumer:
Automobile loans		2,931			2,322			2,215			2,111			2,079			852			41.0
Automobile leases		1,423			1,551			1,698			1,838			1,976			(553	)		(28.0	)

Automobile loans and leases		4,354			3,873			3,913			3,949			4,055			299			7.4
Home equity		7,355			4,973			4,913			4,973			5,041			2,314			45.9
Residential mortgage		5,456			4,351			4,496			4,635			4,748			708			14.9
Other loans		647			424			422			430			430			217			50.5

Total consumer		17,812			13,621			13,744			13,987			14,274			3,538			24.8

Total loans and leases		39,828			26,439			26,203			26,299			26,313			13,515			51.4
Allowance for loan and lease losses		(475	)		(297	)		(278	)		(282	)		(291	)		(184	)		(63.2	)

Net loans and leases		39,353			26,142			25,925			26,017			26,022			13,331			51.2

Total earning assets		46,871			31,675			31,275			31,674			31,970			14,901			46.6

Cash and due from banks		1,111			748			826			830			823			288			35.0
Intangible assets		3,337			626			627			631			634			2,703			N.M.
All other assets		3,124			2,398			2,480			2,617			2,633			491			18.6

Total Assets	$	53,968		$	35,150		$	34,930		$	35,470		$	35,769		$	18,199			50.9	%


Liabilities and Shareholders’ Equity
Deposits:
Demand deposits — non-interest bearing	$	5,384		$	3,591		$	3,530		$	3,580		$	3,509		$	1,875			53.4	%
Demand deposits — interest bearing		3,808			2,404			2,349			2,219			2,169			1,639			75.6
Money market deposits		6,869			5,466			5,489			5,548			5,689			1,180			20.7
Savings and other domestic deposits		5,043			2,863			2,827			2,849			2,923			2,120			72.5
Core certificates of deposit		10,425			5,591			5,455			5,380			5,334			5,091			95.4

Total core deposits		31,529			19,915			19,650			19,576			19,624			11,905			60.7
Other domestic deposits of $100,000 or more		1,694			1,124			1,219			1,282			1,141			553			48.5
Brokered deposits and negotiable CDs		3,728			2,682			3,020			3,252			3,307			421			12.7
Deposits in foreign offices		701			552			562			598			521			180			34.5

Total deposits		37,652			24,273			24,451			24,708			24,593			13,059			53.1
Short-term borrowings		2,542			2,075			1,863			1,832			1,660			882			53.1
Federal Home Loan Bank advances		2,553			1,329			1,128			1,121			1,349			1,204			89.3
Subordinated notes and other long-term debt		3,912			3,470			3,487			3,583			3,921			(9	)		(0.2	)

Total interest bearing liabilities		41,275			27,556			27,399			27,664			28,014			13,261			47.3

All other liabilities		1,103			960			987			1,142			1,276			(173	)		(13.6	)
Shareholders’ equity		6,206			3,043			3,014			3,084			2,970			3,236			N.M.

Total Liabilities and Shareholders’ Equity	$	53,968		$	35,150		$	34,930		$	35,470		$	35,769		$	18,199			50.9	%

N.M., not a meaningful value.


⁽¹⁾		For purposes of this analysis, non-accrual loans are reflected in the average balances of loans.

Table 7 — Consolidated Quarterly Net Interest Margin Analysis


	Average Rates ⁽²⁾
	2007									2006
Fully taxable equivalent basis ⁽¹⁾	Third			Second			First			Fourth			Third

Assets
Interest bearing deposits in banks		4.69	%		6.47	%		5.13	%		5.50	%		5.23	%
Trading account securities		6.01			5.74			5.27			4.10			4.32
Federal funds sold and securities purchased under resale agreements		5.26			5.28			5.24			5.35			5.13
Loans held for sale		5.13			5.79			6.27			6.01			6.24
Investment securities:
Taxable		6.09			6.11			6.13			6.05			5.49
Tax-exempt		6.78			6.69			6.66			6.68			6.80

Total investment securities		6.19			6.20			6.21			6.13			5.64
Loans and leases: ⁽³⁾
Commercial:
Middle market commercial and industrial		7.77			7.39			7.48			7.55			7.40
Middle market commercial real estate:
Construction		7.67			7.62			8.41			8.37			8.49
Commercial		7.60			7.34			7.64			7.57			7.86

Middle market commercial real estate		7.62			7.42			7.87			7.80			8.05
Small business		7.55			7.30			7.24			7.18			7.13

Total commercial		7.68			7.38			7.56			7.56			7.56

Consumer:
Automobile loans		7.25			7.10			6.92			6.75			6.62
Automobile leases		5.56			5.34			5.25			5.21			5.10

Automobile loans and leases		6.70			6.39			6.25			6.03			5.88
Home equity		7.95			7.63			7.67			7.75			7.62
Residential mortgage		6.06			5.61			5.54			5.55			5.46
Other loans		10.71			9.57			9.52			9.28			9.41

Total consumer		7.17			6.69			6.58			6.58			6.46

Total loans and leases		7.45			7.03			7.05			7.04			6.96

Total earning assets		7.25	%		6.92	%		6.98	%		6.86	%		6.73	%


Liabilities and Shareholders’ Equity
Deposits:
Demand deposits — non-interest bearing		—	%		—	%		—	%		—	%		—	%
Demand deposits — interest bearing		1.53			1.22			1.21			1.04			0.97
Money market deposits		3.78			3.85			3.78			3.75			3.66
Savings and other domestic deposits		2.50			2.16			2.02			1.90			1.75
Core certificates of deposit		4.99			4.79			4.72			4.58			4.40

Total core deposits		3.69			3.49			3.41			3.32			3.20
Other domestic deposits of $100,000 or more		4.81			5.30			5.32			5.29			5.18
Brokered deposits and negotiable CDs		5.42			5.53			5.50			5.53			5.50
Deposits in foreign offices		3.29			3.16			2.99			3.18			3.12

Total deposits		3.94			3.84			3.81			3.78			3.66
Short-term borrowings		4.10			4.50			4.32			4.21			4.10
Federal Home Loan Bank advances		5.31			4.76			4.44			4.50			4.51
Subordinated notes and other long-term debt		6.15			5.96			5.77			5.96			5.75

Total interest bearing liabilities		4.24	%		4.20	%		4.14	%		4.12	%		4.02	%

Net interest rate spread		3.01	%		2.72	%		2.84	%		2.74	%		2.71	%
Impact of non-interest bearing funds on margin		0.51			0.54			0.52			0.54			0.51

Net interest margin		3.52	%		3.26	%		3.36	%		3.28	%		3.22	%


⁽¹⁾		Fully taxable equivalent (FTE) yields are calculated assuming a 35% tax rate. See Table 1 for the FTE adjustment.

⁽²⁾		Loan, lease, and deposit average rates include impact of applicable derivatives and non-deferrable fees.

⁽³⁾		For purposes of this analysis, non-accrual loans are reflected in the average balances of loans.

2007 First Nine Months versus 2006 First Nine Months

Fully taxable equivalent net interest income for the first nine-month period of 2007 was $932.5 million. This represented an increase of $159.4 million, or 21%, from the comparable year-ago period. This reflected the favorable impact of a $5.3 billion increase in average earning assets, of which $5.0 billion represented an increase in average loans and leases, as well as the benefit of an increase in the fully taxable equivalent net interest margin of 11 basis points to 3.40%. These increases were primarily merger related.

The following table details the estimated merger related impacts on our reported loans and deposits:

Table 8 — Average Loans/Leases and Deposits — Estimated Merger Related Impacts — Nine Months 2007 vs. Nine Months 2006


	Nine Months Ended
	September 30,				Change						Merger		Non-merger Related
(in millions)	2007		2006		Amount			Percent			Related		Amount			% ⁽¹⁾

Loans
Total commercial	$	15,799	$	11,715	$	4,084			34.9	%	$	2,915	$	1,169			8.0	%

Automobile loans and leases		4,048		4,135		(87	)		(2.1	)		144		(231	)		(5.4	)
Home equity		5,756		4,969		787			15.8			795		(8	)		(0.1	)
Residential mortgage		4,771		4,563		208			4.6			371		(163	)		(3.3	)
Other consumer		499		442		57			12.9			48		9			1.9

Total consumer		15,074		14,109		965			6.8			1,357		(392	)		(2.5	)

Total loans	$	30,873	$	25,824	$	5,049			19.6	%	$	4,273	$	776			2.6	%


Deposits
Demand deposits — non-interest bearing	$	4,175	$	3,513	$	662			18.8	%	$	610	$	52			1.3	%
Demand deposits — interest bearing		2,859		2,110		749			35.5			487		262			10.1
Money market deposits		5,946		5,624		322			5.7			332		(10	)		(0.2	)
Savings and other domestic time deposits		3,586		3,041		545			17.9			865		(320	)		(8.2	)
Core certificates of deposit		7,176		4,939		2,237			45.3			1,543		694			10.7

Total core deposits		23,742		19,227		4,515			23.5			3,836		679			2.9
Other deposits		5,098		4,780		318			6.7			447		(129	)		(2.5	)

Total deposits	$	28,840	$	24,007	$	4,833			20.1	%	$	4,284	$	549			1.9	%


⁽¹⁾		Calculated as non-merger related / (prior period + merger-related)

The $0.8 billion, or 3%, of non-merger related increase in total average loans primarily reflected:

•

$1.2 billion, or 8%, increase in average total commercial loans, reflecting continued strong growth in middle-market C&I loans. The increase in commercial loans was spread across substantially all regions.

Partially offset by:

•

$0.4 billion, or 3%, decrease in average total consumer loans, reflecting continued declines in automobile leasing due to low consumer demand and competitive pricing, as well as a decline in residential mortgages due to the impact of mortgage loan sales over the last 12 months.

Concerning total average deposits, the $0.5 billion, or 2%, non-merger related increase primarily reflected:

•

$0.7 billion, or 3%, in average total core deposits, reflecting strong growth in interest bearing demand deposits. While there was strong growth in core certificates of deposits, this was partially offset by the decline in savings and other domestic deposits, as customers transferred funds from lower rate to higher rate accounts.

Table 9 – Consolidated YTD Average Balance Sheets and Net Interest Margin Analysis


	YTD Average Balances												YTD Average Rates ⁽²⁾
Fully taxable equivalent basis ⁽¹⁾	Nine Months Ended Sept 30,						Change						Nine Months Ended September 30,
(in millions of dollars)	2007			2006			Amount			Percent			2007			2006

Assets
Interest bearing deposits in banks	$	187		$	44		$	143			N.M.	%		4.93	%		6.16	%
Trading account securities		480			84			396			N.M.			5.94			4.24
Federal funds sold and securities purchased under resale agreements		545			251			294			N.M.			5.26			4.76
Loans held for sale		318			279			39			14.0			5.61			6.13
Investment securities:
Taxable		3,601			4,333			(732	)		(16.9	)		6.11			5.29
Tax-exempt		632			562			70			12.5			6.71			6.78

Total investment securities		4,233			4,895			(662	)		(13.5	)		6.20			5.46
Loans and leases: ⁽³⁾
Commercial:
Middle market commercial and industrial		7,542			5,450			2,092			38.4			7.59			7.33
Middle market commercial real estate:
Construction		1,395			1,277			118			9.2			7.86			7.98
Commercial		3,764			2,720			1,044			38.4			7.55			7.06

Middle market commercial real estate		5,159			3,997			1,162			29.1			7.63			7.35
Small business		3,098			2,268			830			36.6			7.40			6.90

Total commercial		15,799			11,715			4,084			34.9			7.57			7.25

Consumer:
Automobile loans		2,492			2,039			453			22.2			7.11			6.51
Automobile leases		1,556			2,096			(540	)		(25.8	)		5.38			5.02

Automobile loans and leases		4,048			4,135			(87	)		(2.1	)		6.44			5.75
Home equity		5,756			4,969			787			15.8			7.77			7.32
Residential mortgage		4,771			4,563			208			4.6			5.76			5.40
Other loans		499			442			57			12.9			10.05			9.25

Total consumer		15,074			14,109			965			6.8			6.85			6.30

Total loans and leases		30,873			25,824			5,049			19.6			7.22			6.73

Allowance for loan and lease losses		(351	)		(289	)		(62	)		21.5

Net loans and leases		30,522			25,535			4,987			19.5

Total earning assets		36,636			31,377			5,259			16.8			7.08	%		6.51	%

Cash and due from banks		925			823			102			12.4
Intangible assets		1,540			545			995			N.M.
All other assets		2,670			2,535			135			5.3

Total Assets	$	41,420		$	34,991		$	6,429			18.4	%


Liabilities and Shareholders’ Equity
Deposits:
Demand deposits — non-interest bearing	$	4,175		$	3,513		$	662			18.8	%		—	%		—	%
Demand deposits — interest bearing		2,859			2,110			749			35.5			1.36			0.86
Money market deposits		5,946			5,624			322			5.7			3.80			3.35
Savings and other domestic time deposits		3,586			3,041			545			17.9			2.28			1.61
Core certificates of deposit		7,176			4,939			2,237			45.3			4.87			4.13

Total core deposits		23,742			19,227			4,515			23.5			3.56			2.92
Other domestic time deposits of $100,000 or more		1,347			1,055			292			27.7			5.10			4.87
Brokered deposits and negotiable CDs		3,146			3,238			(92	)		(2.8	)		5.48			5.11
Deposits in foreign offices		605			487			118			24.2			3.16			2.82

Total deposits		28,840			24,007			4,833			20.1			3.88			3.37
Short-term borrowings		2,163			1,790			373			20.8			4.29			3.94
Federal Home Loan Bank advances		1,675			1,453			222			15.3			4.97			4.28
Subordinated notes and other long-term debt		3,624			3,570			54			1.5			5.96			5.55

Total interest bearing liabilities		32,127			27,307			4,820			17.7			4.20			3.74

All other liabilities		1,018			1,272			(254	)		(20.0	)
Shareholders’ equity		4,100			2,899			1,201			41.4

Total Liabilities and Shareholders’ Equity	$	41,420		$	34,991		$	6,429			18.4	%

Net interest rate spread														2.88			2.77
Impact of non-interest bearing funds on margin														0.52			0.52

Net interest margin														3.40	%		3.29	%


N.M., not a meaningful value.

⁽¹⁾		Fully taxable equivalent (FTE) yields are calculated assuming a 35% tax rate.

⁽²⁾		Loan and lease and deposit average rates include impact of applicable derivatives and non-deferrable fees.

⁽³⁾		For purposes of this analysis, non-accrual loans are reflected in the average balances of loans.

Provision for Credit Losses

(This section should be read in conjunction with Significant Items 1,5, and the Credit Risk section.)

The provision for credit losses is the expense necessary to maintain the ALLL and the allowance for unfunded loan commitments (AULC) at levels adequate to absorb our estimate of probable inherent credit losses in the loan and lease portfolio and the portfolio of unfunded loan commitments.

The provision for credit losses in the 2007 third quarter was $42.0 million, up $27.8 million from the year-ago quarter. Compared with the 2007 second quarter, the provision for credit losses declined $18.1 million. The 2007 second quarter included $24.8 million of provision for credit losses for two eastern Michigan credit relationships and one northern Ohio commercial credit. In the current quarter, charge-offs of $10.0 million, related to these credit relationships, were taken against these reserves. On a reported basis, 2007 third quarter net charge-offs of $47.1 million exceeded current period provision for credit losses by $5.1 million. Adjusting for the $10.0 million of charge-offs associated with these three commercial credits, the current quarter provision for credit losses exceeded net charge-offs by $4.9 million. Refer to the ‘Credit Quality’ section of this document for additional discussion regarding the allowance for credit losses and charge-offs.

Non-Interest Income

(This section should be read in conjunction with Significant Items1, 2, 3, 4, and 7.)

Table 10 reflects non-interest income detail for each of the past five quarters and the first nine-month periods of 2007 and 2006.

Table 10 — Non-Interest Income


	2007								2006						3Q07 vs 3Q06
(in thousands)	Third			Second			First		Fourth			Third			Amount			Percent

Service charges on deposit accounts	$	78,107		$	50,017		$	44,793	$	48,548		$	48,718		$	29,389			60.3	%
Trust services		33,562			26,764			25,894		23,511			22,490			11,072			49.2
Brokerage and insurance income		28,806			17,199			16,082		14,600			14,697			14,109			96.0
Other service charges and fees		21,045			14,923			13,208		13,784			12,989			8,056			62.0
Bank owned life insurance income		14,847			10,904			10,851		10,804			12,125			2,722			22.4
Mortgage banking income		9,629			7,122			9,351		6,169			8,512			1,117			13.1
Securities (losses) gains		(13,152	)		(5,139	)		104		(15,804	)		(57,332	)		44,180			(77.1	)
Other income		31,830			34,403			24,894		38,994			35,711			(3,881	)		(10.9	)

Total non-interest income	$	204,674		$	156,193		$	145,177	$	140,606		$	97,910		$	106,764			N.M.	%


	Nine Months Ended Sept 30,						YTD 2007 vs 2006
(in thousands)	2007			2006			Amount			Percent

Service charges on deposit accounts	$	172,917		$	137,165		$	35,752			26.1	%
Trust services		86,220			66,444			19,776			29.8
Brokerage and insurance income		62,087			44,235			17,852			40.4
Other service charges and fees		49,176			37,570			11,606			30.9
Bank owned life insurance income		36,602			32,971			3,631			11.0
Mortgage banking income		26,102			35,322			(9,220	)		(26.1	)
Securities losses		(18,187	)		(57,387	)		39,200			(68.3	)
Other income		91,127			124,143			(33,016	)		(26.6	)

Total non-interest income	$	506,044		$	420,463		$	85,581			20.4	%


N.M., not a meaningful value.

Table 11 details mortgage banking income and the net impact of MSR hedging activity for each of the past five quarters and for the first nine-month periods of 2007 and 2006.

Table 11 — Mortgage Banking Income and Net Impact of MSR Hedging


	2007									2006						3Q07 vs 3Q06
(in thousands)	Third			Second			First			Fourth			Third			Amount			Percent

Mortgage Banking Income
Origination and secondary marketing	$	8,375		$	6,771		$	4,940		$	4,057		$	3,070			5,305			N.M.	%
Servicing fees		10,811			6,976			6,820			6,662			6,077			4,734			77.9
Amortization of capitalized servicing ⁽¹⁾		(6,571	)		(4,449	)		(3,638	)		(3,835	)		(4,484	)		(2,087	)		(46.5	)
Other mortgage banking income		3,016			2,822			3,247			1,778			3,887			(871	)		(22.4	)

Sub-total		15,631			12,120			11,369			8,662			8,550			7,081			82.8
MSR valuation adjustment ⁽¹⁾		(9,863	)		16,034			(1,057	)		(1,907	)		(10,716	)		853			(8.0	)
Net trading gains (losses) related to MSR hedging		3,861			(21,032	)		(961	)		(586	)		10,678			(6,817	)		(63.8	)

Total mortgage banking income	$	9,629		$	7,122		$	9,351		$	6,169		$	8,512		$	1,117			13.1	%


Capitalized mortgage servicing rights ⁽²⁾	$	228,933		$	155,420		$	134,845		$	131,104		$	129,317		$	99,616			77.0	%
Total mortgages serviced for others ⁽²⁾		15,073,000			8,693,000			8,494,000			8,252,000			7,994,000			7,079,000			88.6
MSR % of investor servicing portfolio		1.52	%		1.79	%		1.59	%		1.59	%		1.62	%		(0.10	)%		(6.2	)


Net Impact of MSR Hedging
MSR valuation adjustment ⁽¹⁾	$	(9,863	)	$	16,034		$	(1,057	)	$	(1,907	)	$	(10,716	)	$	853			(8.0)	%
Net trading gains (losses) related to MSR hedging		3,861			(21,032	)		(961	)		(586	)		10,678			(6,817	)		(63.8	)
Net interest income (losses) related to MSR hedging		2,357			248			—			(2	)		38			2,319			N.M.

Net impact of MSR hedging	$	(3,645	)	$	(4,750	)	$	(2,018	)	$	(2,495	)	$	—		$	(3,645	)		—	%


	Nine Months Ended September 30,						YTD 2007 vs 2006
(in thousands)	2007			2006			Amount			Percent

Mortgage Banking Income
Origination and secondary marketing	$	20,086		$	14,160		$	5,926			41.9	%
Servicing fees		24,607			17,997			6,610			36.7
Amortization of capitalized servicing ⁽¹⁾		(14,658	)		(11,309	)		(3,349	)		29.6
Other mortgage banking income		9,085			8,395			690			8.2

Sub-total		39,120			29,243			9,877			33.8
MSR valuation adjustment ⁽¹⁾		5,114			6,778			(1,664	)		(24.6	)
Net trading losses related to MSR hedging		(18,132	)		(699	)		(17,433	)		N.M.

Total mortgage banking income	$	26,102		$	35,322		$	(9,220	)		(26.1	)%


Capitalized mortgage servicing rights ⁽²⁾	$	228,933		$	129,317		$	99,616			77.0	%
Total mortgages serviced for others ⁽²⁾		15,073,000			7,994,000			7,079,000			88.6
MSR % of investor servicing portfolio		1.52	%		1.62	%		(0.10	)%		(6.2	)

Net Impact of MSR Hedging
MSR valuation adjustment ⁽¹⁾	$	5,114		$	6,778		$	(1,664	)		(24.6	)%
Net trading losses related to MSR hedging		(18,132	)		(699	)		(17,433	)		N.M.
Net interest income related to MSR hedging		2,605			38			2,567			N.M.

Net impact of MSR hedging	$	(10,413	)	$	6,117		$	(16,530	)		N.M.	%


N.M., not a meaningful value.

⁽¹⁾		The change in fair value for the period represents the MSR valuation adjustment, excluding amortization of capitalized servicing.

⁽²⁾		At period end.

2007 Third Quarter versus 2006 Third Quarter

Non-interest income increased $106.8 million, or 109%, from the year-ago quarter, of which $68.7 million was merger related. The following table details the estimated merger related impact on our reported non-interest income:

Table 12 — Non-Interest Income — Estimated Merger Related Impacts — 3Q’07 vs. 3Q’06


	2007			2006			Change						Merger		Non-merger Related
(in thousands)	Third			Third			Amount			%			Related		Amount			% ⁽¹⁾

Service charges on deposit accounts	$	78,107		$	48,718		$	29,389			60.3	%	$	24,110	$	5,279			7.2	%
Trust services		33,562			22,490			11,072			49.2			7,009		4,063			13.8
Brokerage and insurance income		28,806			14,697			14,109			96.0			17,061		(2,952	)		(9.3	)
Other service charges and fees		21,045			12,989			8,056			62.0			5,800		2,256			12.0
Bank owned life insurance income		14,847			12,125			2,722			22.4			1,807		915			6.6
Mortgage banking income		9,629			8,512			1,117			13.1			6,256		(5,139	)		(34.8	)
Securities losses		(13,152	)		(57,332	)		44,180			(77.1	)		283		43,897			(76.9	)
Other income		31,830			35,711			(3,881	)		(10.9	)		6,390		(10,271	)		(24.4	)

Total non-interest income	$	204,674		$	97,910		$	106,764			109.0	%	$	68,716	$	38,048			22.8	%


⁽¹⁾		Calculated as non-merger related / (prior period + merger-related)

The $38.0 million, or 23%, non-merger related increase primarily reflected:

	•		$43.9 million less in investment securities losses. In the 2007 third quarter, net investment securities losses totaled $13.2 million and consisted of $23.3 million of realized securities impairment losses on certain investment securities, partially offset by $10.2 million of realized gains on other investment securities. This compared favorably with $57.3 million of such losses in the comparable year-ago period, virtually all of which related to balance sheet restructuring (see Significant Item #2 under “Discussion of Results of Operations Significant Items Influencing Financial Performance Comparisons”).

	•		$5.3 million, or 7%, increase in service charges on deposit accounts, reflecting strong growth in personal service charge income.

	•		$4.1 million, or 14%, increase in trust services income, of which $2.5 million reflected fees associated with the acquisition of Unified Fund Services in the 2006 fourth quarter.

Partially offset by:

	•		$10.3 million, or 24%, decline in other income, reflecting a $7.9 million decline in automobile operating lease income as that portfolio continued to decline, and $4.7 million of higher equity investment losses.

	•		$5.1 million, or 35%, decline in mortgage banking income, reflecting the current quarter’s $6.0 million of MSR hedging losses, compared with no material MSR valuation hedging impact in the comparable year-ago quarter.

2007 Third Quarter versus 2007 Second Quarter

Non-interest income increased $48.5 million, or 31%, from the 2007 second quarter, of which $68.7 million was merger related. The following table details the estimated merger related impact on our reported non-interest income.

Table 13 — Non-Interest Income — Estimated Merger Related Impacts — 3Q’07 vs. 2Q’07


	2007						Change						Merger		Non-merger Related
(in thousands)	Third			Second			Amount			%			Related		Amount			% ⁽¹⁾

Service charges on deposit accounts	$	78,107		$	50,017		$	28,090			56.2	%	$	24,110	$	3,980			5.4	%
Trust services		33,562			26,764			6,798			25.4			7,009		(211	)		(0.6	)
Brokerage and insurance income		28,806			17,199			11,607			67.5			17,061		(5,454	)		(15.9	)
Other service charges and fees		21,045			14,923			6,122			41.0			5,800		322			1.6
Bank owned life insurance income		14,847			10,904			3,943			36.2			1,807		2,136			16.8
Mortgage banking income		9,629			7,122			2,507			35.2			6,256		(3,749	)		(28.0	)
Securities losses		(13,152	)		(5,139	)		(8,013	)		155.9			283		(8,296	)		170.8
Other income		31,830			34,403			(2,573	)		(7.5	)		6,390		(8,963	)		(22.0	)

Total non-interest income	$	204,674		$	156,193		$	48,481			31.0	%	$	68,716	$	(20,235	)		(9.0	)%


⁽¹⁾		Calculated as non-merger related / (prior period + merger-related)

The $20.2 million, or 9%, non-merger related decline primarily reflected:

	•		$9.0 million, or 22%, decline in other income, reflecting $4.4 million of equity investment losses in the current quarter compared with $2.3 million of such gains in the prior quarter, as well as declines in automobile operating lease income, loan sale gains, and lease prepayment income.

	•		$8.3 million increase in securities losses as the current quarter results reflected $13.2 million of net investment securities losses, compared with $5.1 million of such losses in the 2007 second quarter.

	•		$5.5 million, or 16%, decline in brokerage and insurance income, primarily reflecting seasonal trends in property and casualty insurance income.

	•		$3.7 million, or 28%, decline in mortgage banking income, reflecting $1.0 million higher MSR hedging losses this quarter and lower production, and gains on loan sales.

Partially offset by:

•

$4.0 million, or 5%, increase in service charges on deposit accounts, primarily reflecting higher personal service charge income and seasonal trends.

2007 First Nine Months versus 2006 First Nine Months

Non-interest income for the first nine-month period of 2007 increased $85.6 million, or 20%, from the comparable year-ago period, of which $68.7 million was merger related. The following table details the estimated merger related impact on our non-interest income.

Table 14 — Non-Interest Income — Estimated Merger Related Impact — Nine Months 2007 vs. Nine Months 2006


	Nine Months Ended
	September 30,						Change						Merger		Non-merger Related
(in thousands)	2007			2006			Amount			%			Related		Amount			% ⁽¹⁾

Service charges on deposit accounts	$	172,917		$	137,165		$	35,752			26.1	%	$	24,110	$	11,642			7.2	%
Trust services		86,220			66,444			19,776			29.8			7,009		12,767			17.4
Brokerage and insurance income		62,087			44,235			17,852			40.4			17,061		791			1.3
Other service charges and fees		49,176			37,570			11,606			30.9			5,800		5,806			13.4
Bank owned life insurance income		36,602			32,971			3,631			11.0			1,807		1,824			5.2
Mortgage banking income		26,102			35,322			(9,220	)		(26.1	)		6,256		(15,476	)		(37.2	)
Securities losses		(18,187	)		(57,387	)		39,200			(68.3	)		283		38,917			(68.2	)
Other income		91,127			124,143			(33,016	)		(26.6	)		6,390		(39,406	)		(30.2	)

Total non-interest income	$	506,044		$	420,463		$	85,581			20.4	%	$	68,716	$	16,865			3.4	%


⁽¹⁾		Calculated as non-merger related / (prior period + merger-related)

The $16.9 million non-merger related increase primarily reflected:

	•		$38.9 million less in investment securities losses. In the first nine months of 2007, net investment securities losses totaled $18.2 million and consisted of $28.5 million of realized securities impairment losses on certain investment securities, partially offset by $10.2 million of realized gains on other investment securities. This compared favorably with $57.4 million of such losses in the comparable year-ago period, virtually all of which related to balance sheet restructuring (see Significant Item #2 earlier in this document).

	•		$12.8 million, or 17%, increase in trust services income, primarily reflecting $7.3 million of revenues associated with the acquisition of Unified Fund Services and a $3.4 million increase in Huntington Fund fees due to growth in the Huntington Funds’ managed assets.

	•		$11.6 million, or 7%, increase in service charges on deposit accounts, primarily reflecting higher personal and commercial service charge income.

Partially offset by:

	•		$39.4 million decline in other income, reflecting a $32.6 million decline in automobile operating lease income as that portfolio continues to decline, and $10.6 million of equity investment losses in the first nine months of 2007 compared with $4.2 million of such gains in the comparable year-ago period.

	•		$15.5 million decline in mortgage banking income, driven by $13.0 million net impact of MSR hedging losses.

Non-Interest Expense

(This section should be read in conjunction with Significant Items 1, 2, 4 and 7.)

Table 15 reflects non-interest expense detail for each of the last five quarters and for the first nine-month periods of 2007 and 2006.


Part I. Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets at September 30, 2007, December 31, 2006, and September 30, 2006	59

	Condensed Consolidated Statements of Income for the three-month and nine-month periods ended September 30, 2007 and 2006	60

	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine-month periods ended September 30, 2007 and 2006	61

	Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2007 and 2006	62

	Notes to Unaudited Condensed Consolidated Financial Statements	63

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	80

Item 4.	Controls and Procedures	80

Item 4T.	Controls and Procedures	80

Part II. Other Information

Item 6.	Exhibits	81

Signatures		82
EX-10.5
EX-10.6
EX-10.7
EX-12.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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	•		$0.4 billion, or 7%, increase in other non-core deposits, reflecting an increase in wholesale deposits.

	•		$0.1 billion increase in average total core deposits. This reflected strong growth in money market deposits and core certificates of deposit, partially offset by a decline in savings and other domestic deposits as those depositors moved funds into higher rate accounts. The decline in interest bearing and non-interest bearing demand deposits reflected seasonality.